'We love it to death': Woolworths SA has big plans for David Jones

South African retail giant Woolworths Holdings will use its acquisition of David Jones to create the second largest department store in the southern hemisphere and one of the biggest retailers in the world.

Woolworths chief executive Ian Moir said this afternoon he believed he could add at least $130 million per annum to David Jones bottom line within five years.

Callum Hill with his grandmother Mary Feeney at the David Jones Christmas window display in Sydney. Photo: Tamara Dean

He said he believed there was a strong future for department stores in Australia.

''The department store isn't dead, mediocrity is dead, poor retail is dead, but what is alive is a great department store that can give a great product range, great service, product that is on trend fashionable, great value and experience in stores that you love and that engages you online as well.''

"Woolies [South Africa] is an iconic, well-loved and historic retail brand in South Africa. We understand what that means and what that means to our customers. The David Jones customer will not be disappointed with what we do and we will always have their interest at heart."

Lifting the bottom line

Mr Moir said he believed Woolworths could add $130 million per year to David Jones bottom line, a vast improvement on the full-year net profit of $95 million the upmarket department store recorded for fiscal 2013.

His plan for achieving this includes ramping up the proportion and quality of private label apparel in the stores, a better product mix, an improved customer relationship program that anticipates shopper behaviour as well as better service from in-store staff.

The penetration of private label sales in David Jones will jump from their current "tiny" level of around 3 per cent to more than 20 per cent, Mr Moir said.

He is also aiming to generate a greater proportion of sales via the retailer's online presence, aiming for online to make up 10 per cent of sales.

Mr Moir previously ran clothing retailer Country Road in Australia on behalf of Woolworths, which controls the chain.

''This is a natural progression of what we have been doing," Mr Moir said.

"We have got Country Road, we've had Witchery and mimco and we are adding David Jones again because we want to be one of the biggest retailers in the southern hemisphere.''

Thinking big

Mr Moir said combining all of Woolworths' businesses, including David Jones, it would make the group the second largest department store in the southern hemisphere and one of the top 10 department stores in the world.

David Jones private label penetration would be increased through Woolworths' existing private label portfolio and supply chain, with margins also set to improve.

The Woolworths private label business was 25 times the size of David Jones, he said.

A customer relationship management system would be bolted on to David Jones to help better track and anticipate shopper behaviour and tastes.

Mr Moir said currently Woolworths could track more than 70 per cent of sales through its customer cards and internal programs, with the level more than 85 per cent at Country Road. He wanted David Jones to match that.